An audit of the Metropolitan Council found “inconsistencies” between gloomy budget assumptions provided to state legislators and those given to the federal government related to future light-rail projects.

A report released Wednesday by the state’s legislative auditor questioned “whether the council was fully disclosing to the federal government its true financial situation,” given its budget deficit and declining financial support from the Minnesota Legislature.

The council is expected to apply for $1.7 billion in federal aid over the next year to help build the Southwest and Bottineau Blue Line light-rail projects. Without federal support, it is not likely the two lines will be built.

The report states that “the council’s transit finances have been presented in a less favorable light” to state legislators. “These different assumptions lead to significantly different projections of the council’s future financial condition.”

The report drew a swift response from Republican legislators at the Capitol, renewing the bitter debate over mass transit spending and operations of the Met Council, whose members are appointed by the DFL governor.

“Either they are lying to the federal government to secure funding for the Southwest light rail boondoggle, or they misled Minnesota taxpayers who paid for their supposed operating deficit,” Rep. Linda Runbeck, R-Circle Pines, said in a statement.

Lawmakers agreed to spend $70 million this past legislative session to help offset the council’s operating shortfall this fiscal year.

Met Council Regional Administrator Wes Kooistra said in a letter to the legislative auditor that the body has not “attempted to reconcile” financial forecasts. State budget forecasts are short-term for a two-year period, while the Federal Transit Administration (FTA) requires information covering a far longer period.

“A simple reading of the report makes it clear that the alleged discrepancy Republicans claim is comparing apples to oranges. The state budget request — submitted in February 2017 — offers funding projections for the next four years,” Dibble said.

The senator said the dissolution of the regional Counties Transit Improvement Board, “dramatically changed the landscape of funding for transit in the metro area, especially for Southwest Light Rail Transit.”

He said the federal financial management plan submitted at the end of June 2017 provided a look back at 10 years of funding, and 20 years of projected spending. It also included substantial changes to reflect the negative outcomes of the 2017 session and Hennepin County picking up the tab for what he called funding failures at the state level.

The legislative auditor’s report came about after legislators passed a law this spring calling for quarterly reviews of the council’s transportation budget, which totaled $623 million this year. The auditor’s review studied financial information from Jan. 1, 2016, to June 30 this year.

The council has predicted an $86 million shortfall in its transportation budget for 2020 and 2021, due to declining revenue in the motor-vehicle sales tax and increasing demand for Metro Mobility, a transportation service for disabled people.

Council spokeswoman Kate Brickman said, “we appreciate that legislative leaders stepped up and funded our short-term deficit and look forward to continue to talk to them about our future needs — in particular, the growing needs of Metro Mobility, which is a federally mandated service.”

The auditor’s report found no “significant problems” with the council’s balance sheets for its transportation division, and that adequate reserves have been maintained to adjust for variations in transit revenue and expenses.

Auditors recommended that in future reports to the Legislature, the council “explicitly identify” differing budget assumptions for transportation plans.

Rep. Paul Torkelson, R-Hanska, agreed with the recommendation: “There’s been some frustration with different numbers [the Met Council] gave us throughout the session. We need clearer information.”

But Torkelson, chair of the House Transportation Finance Committee, doesn’t believe the council is “being dishonest. It’s not like there are two sets of books — the federal government needs one perspective on the data, and the state requires a different perspective.”

The FTA said in a statement Wednesday that it evaluates transit projects for its grant program based criteria set by statute. The evaluation process is “a thorough and rigorous review of the project [builder’s] financial capacity and the financial plan for the project,” the statement says.

The audit also explored the finances of the now-defunct Counties Transit Improvement Board, which used various tax revenue to pay for local transit projects. No issues were found with that board’s finances.

Janet Moore • 612-673-7752 @MooreStrib

Transportation reporter Janet Moore covers trains, planes, automobiles, buses, bikes and pedestrians. Moore has been with the Star Tribune for 21 years, previously covering business news, including the retail, medical device and commercial real estate industries.